Legal Article - Employment Law

Equal Pay Considerations

Equal pay problems can be anticipated and resolved by introducing an analytical job evaluation scheme into the company. Job evaluation is concerned with assessing the relative demands of different jobs within the company on the people performing them.

Only the job is evaluated not the person doing it. Job evaluation is not concerned with differences in individual performance or seniority etc, but simply with the work which anyone doing a particular job has to do.

The Equal Pay legislation requires the use of an analytical method of job evaluation i.e. one which assesses the demands a job makes on a person in terms of such factors as the skills required to perform the job satisfactorily, the responsibilities of the job for money, people, materials etc, its physical and mental requirements and working conditions for example.

Needless to say care must be taken that the scheme itself is free from bias in the factors chosen to assess jobs and the importance (i.e. weight) allocated to each factor.

The Equal Opportunities Commission have produced a Code of Practice on Equal Pay. The recommendations in this Code should be complied with unless there are good objective reasons for not doing so, otherwise any claims made under the Sex Discrimination Act and Equal Pay Act are likely to succeed where the employer has not followed the Codes recommendations.

At the heart of the Code are the Commission’s recommendations that employers adopt an equal pay policy, carry out a pay review and take action to deal with pay inequality. An internal pay review is “the most appropriate method of ensuring that a pay system delivers equal pay free from sex bias,” says the Code. It recommends an eight stage review.

The initial stages of the review require: an analysis of the pay system to produce a breakdown of all employees; the use of that data to examine each element of the pay system; and identification of any elements in the pay system which the review indicates may be a source of discrimination.

The Code gives guidance on carrying out these three stages. It looks at the particular elements of a pay system, e.g. basic pay; bonus payments, performance pay, competency-based pay etc, and highlights some of the discriminatory practices that might arise along with recommended action to address them.

Where the review finds that particular rules or practices are likely to give rise to discrimination in pay, the Code recommends that these should be changed.

Employers should, however, avoid further discrimination as a result of such a change by analysing the likely effects of such a change and rectify any discrimination, which could be caused. Once this has been done, the next stage is the introduction of equal pay for existing employees.

The pay review, however, does not end there. A system of regular monitoring should be set up to allow checks to be made to pay practices followed by the drawing up and publication of an equal pay policy.